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The 5 Best Reasons to Apply for a Personal Loan (Plus the Worst Reason to Get One)

Monday, March 13, 2017 2:26
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Personal loans are everywhere now. As banks and lending institutions tighten the purse strings, people have been increasingly applying for personal loans. Personal loans, however, are not silver bullets for every need. In some situations, they can actually help, but in others, they’re simply unnecessary.

If you’re wondering whether to apply for one of these unique bank loans, here are the five best reasons to get a personal loan:

  1. Consolidating Debt

The best reason to get a personal loan is to use it for debt consolidation. Basically, taking out a massive loan to pay back all your smaller loans will make your finances more manageable. This strategy isn’t just for simplicity, it also helps lower the rate of interest you pay on your outstanding debt.

  1. Remodeling your home

Accessing a personal loan is a better option than applying for a  home equity line of credit, or HELOC when you don’t have equity in your home. Personal loans give you a lot more flexibility and you can access considerable cash at reasonable rates. Most people plan to repair the house, fix the roof, change the tiles or build a patio every couple of years. However, most homeowners simply do not have the cash for such big-ticket expenses and personal loans could be a great way to make up for that.

  1. Unexpected health care emergencies

Health care in America is tremendously expensive and the costs can spiral if you don’t have health insurance. Even if you have health insurance, unexpected medical bills can catch you off guard when you’re facing a cash crunch. Dental appointments, fertility treatments, and cosmetic surgeries are also medical needs that aren’t usually covered by insurance, so a backup plan is needed. Personal loans can be a quick fix for stressful situations like these.

  1. Paying off credit cards

If you find that your credit card interest rate is a lot higher than the personal loan rate you’ve been offered, it makes sense to swap them. Borrowing on unsecured personal credit to pay off expensive credit card debt could be a great idea for most people.

  1. Funeral Costs

Funeral services can be rather expensive. Sometimes the deceased’s assets are enough to cover the costs, but often family members are left without clear guidelines on how to pay for the funeral. Personal loans can definitely help you buy the casket and pay for the services.

Of course, personal loans aren’t meant for every sort of purchase. The worst reason to apply for a personal loan is to pay for temporary consumption – like a wedding or a holiday. Use debt smartly to solve your personal finance issues. The best reasons to apply for a personal loan is to consolidate your debt, pay off your credit cards, meet unexpected medical or funeral costs, and remodel your home.

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